Monday, December 9, 2013
Warning: it's not your usual legal scholarship alth
ough it does try to make some serious points about the Supreme Court's arbitration jurisprudence and its dominant methodology of statutory interpretation. Click here.
Wednesday, December 4, 2013
The Fifth Circuit just handed down its opinion in D.R. Horton v. NLRB, and, while the Board may have won the battle, it seems to have lost the war – absent en banc review or cert.
As anybody who has suffered through presentations or conversations with Tim Glynn or me knows, Horton had enormous potential for changing the landscape of arbitration law, reflected in our recent article in Alabama. In its decision, the NLRB ruled that the company’s “Mutual Arbitration Agreement” violated Section 7 and 8(a) for two reasons: first, by being drafted broadly enough to convey to a reasonable employee that she was giving up her right to file unfair labor practice charges with the Board; and, second, by cutting off the right of employees to pursue both class (or joint) actions and class (or joint) arbitration, it infringed employee rights to act concertedly for mutual aid and protection.
The second ground was obviously more sweeping than the first, since it had the potential – at least in the employment arena – to undermine the Supreme Court’s validation in Concepcion of agreements barring class arbitration.
Before the Fifth Circuit, the Board won on the first ground and lost on the second. Upholding the Board on the first ground is not insignificant -– management-side attorneys will be scurrying around for months reviewing and revising arbitration agreements to make more explicit that workers retain the right to resort to the NLRB. But far more important is the court’s rejection of the concerted action argument.
To get to either of these issues, the Fifth Circuit had to wade through a variety of arguments about the composition of the Board that rendered Horton, including validity of recess appointments of Board members (the issue before the Supreme Court in Noel Canning), whether Member Becker’s appointment (even if valid) expired before Horton was handed down, and whether there was improper delegation of authority to the three member panel that decided Horton. I’ll spare the reader the technical discussion, but the Fifth Circuit either ruled in the Board’s favor or dodged the questions thus allowing it to reach the merits.
As to whether the arbitration agreement violated 8(1)(1) and (4) for “including language that would lead employees to a reasonable belief that they were prohibited from filing unfair labor charges,” the court upheld the Board. Even though the agreement did not explicitly address charges to the agency, it was written in language that could be reasonably construed to do so. Again, the court’s upholding the Board’s conclusion on this ground is significant, although clearly of less import than if the court had also affirmed on the other ground.
As for the second ground, the opinion acknowledged “some support” for the “Board’s analysis that collective or class claims, whether in lawsuits or in arbitration” are protected concerted activity under the NLRA. But that conclusion did not take into account the Federal Arbitration Act, and whatever deference the Board may be owed in construing the NLRA in isolation was not appropriate where the FAA was concerned. Essentially treating the FAA as a “super-statute,” the court stressed the “barrier any statute faces before it displaces the FAA.”
For reasons not clear, the opinion then detours into an excursion as to whether the class actions are a substantive or procedural right, not surprisingly finding them procedural. Why that would matter when Section 7 appears to largely protect rights that could be described as “procedural” (organizing) is not so clear.
At any rate, the court proceeded to consider two “exceptions” to the FAA command that arbitration agreements be enforced according to their terms – although I, at least, don't understand why they are two separate exceptions rather than simply a way of meshing two statutes which are at least in some tension with each other.
The first exception, according to the court, was the FAA’s “savings clause,” which allows courts to refuse to enforce an arbitration agreement “upon such grounds as exist in law and equity for the revocation of any contract.” Although the NLRA’s prohibition (much less the Norris-LaGuardia Act’s explicit declaration that agreements to such effect are not enforceable) would seem to satisfy that clause, the Fifth Circuit’s “detailed analysis” of Concepcion led it to the opposite conclusion -- essentially because, while facially neutral between arbitration and litigation, the result would be to disfavor arbitration. The presumption seemed to be that employers would forego even individual arbitration if faced with class actions/class arbitration.
This is all somewhat head-scratching since it essentially bootstraps the conclusion it reaches. The FAA’s preference for arbitration is undeniable, but, by the FAA’s own terms, limited. The limit would seem to have been reached by the boundary staked out by Norris LaGuardia and the NLRA. The preference, nevertheless, somehow o’er leaps the textual boundary that the statute itself established.
At any rate, the court moved on to the second exception – application of the FAA may be precluded by another statutory command (the NLRA). The Fifth Circuit begins, again, by treating FAA as a super-statute, and finding no explicit language trumping the FAA. It doesn’t explain why the Norris LaGuardia language “shall not be enforceable” doesn’t suffice as explicit language to the contrary, but presumably that’s because it only addresses “any undertaking or promise” (emphasis added) without mentioning arbitration. (The court dismisses the Norris LaGuardia argument in a footnote without explaining why).
In any event, lacking explicit trumping language, a contrary “general thrust” of the NLRA is not sufficient, although an “inherent conflict” would be. Such a conflict, however, is lacking because arbitration is generally favored in the union context (of course, the cases cited involve arbitration under collective bargaining agreements where the union can be expected to keep employers in check) and because of “conceptual problems” whose significance is not so clear.
Judge Graves concurred with the affirmance of the Board’s decision but would have found that the arbitration agreement “interferes with the exercise of employees’ substantive rights” under Section 7.
One question that remains puzzling in the wake of the Horton opinion is the effect,, if any, of arbitration agreements that constitute unfair labor practices (as in Horton itself) on the validity of the arbitration agreement. An employer in the situation of Horton could, of course, modify its arbitration agreements to make sufficiently clear to employees executing them that they retain the right to file charges with the Board. But suppose employers don't, or suppose that the question of arbitration arises under an extant agreement that violates the statute as intepreted by both the Board and the Fifth Circuit? Should a court being asked to stay a suit pending arbitration do so, thus "enforcing" an illegal agreement? Or should it find the whole agreement unenforceable because tainted by illegality? Or what?
Wednesday, October 30, 2013
Thanks to Jon Harkavy for sending us the unpublished Fourth Circuit case of Dewan v. Walia. It's one of the extraordinarily rare cases in which a court has overturned an arbitration award for manifest disregard of the law.
Monday, September 30, 2013
- The study and understanding of grievance procedures, the arbitration process and other forms of labor and employment dispute resolution and the impact of law on these processes.
- The impact of law on grievance and arbitration processes.
- The education and training of persons engaged in the resolution of labor -management and employment disputes. Included are the funding of lecture programs, symposiums, conferences and training seminars.
- The preparation and publication of books, symposium materials, articles, and audio-visual materials (e.g. films; websites; CDs) designed to enhance the competence of persons engaged in the arbitration and mediation of labor-management and employment disputes.
- The preparation of material designed to keep arbitrators, mediators, and students of labor-management and employment arbitration abreast of current research into the arbitration process.
- The development of procedures or techniques for the resolution of labor and employment disputes in this and in other countries.
Detailed information on how to apply for the REF grant can be found on the NAA website.
Questions about these grants can be directed to Allen Ponak, REF President, and firstname.lastname@example.org.
Wednesday, July 17, 2013
The Berkeley Journal of Employment and Labor Law (BJELL) and The Employee Rights Advocacy Institute For Law & Policy (The Institute) will be holding a symposium on February 27, 2014 at the University of California, Berkeley School of Law to examine forced arbitration of employment disputes and to explore the impact of this phenomenon on workplace rights. The goal of this symposium is to bring together academics, practitioners, and others in the legal community to engage in a thoughtful dialogue and help raise awareness about forced arbitration of workplace disputes. The symposium is entitled Forced Arbitration in the Workplace: A Symposium. Article drafts are due October 31, 2013; final articles are due January 3, 2014. Here's the call for papers. This looks fantastic!
Tuesday, June 25, 2013
Today the Supreme Court put another nail in the coffin of the withering body of consumer rights. In the American Express v. Italian Colors case, the Court furthered its trend that permits corporations to use arbitration to prevent consumers from challenging their unlawful conduct. The case arose when a group of merchants brought a class action against American Express alleging that the credit card company imposed on them an illegal tying arrangement, in violation of the antitrust law. The merchants' contracts with Amex contained a clause that required all disputes be subject to arbitration and that all disputes be arbitrated on an individual basis. It also prohibited parties from sharing the costs of any litigation or otherwise consolidating their legal claims. The merchants wanted to void the class action waiver and arbitrate as a group because it would cost many hundreds of thousands of dollars to mount an antitrust action yet the average recovery would be only $5000. Hence, they argued, without the ability to bring a class or collective action, they would lose their substantive rights. The Second Circuit agreed. It held that the class action ban could not be enforced "because to do so would grant Amex de facto immunity from antitrust liability by removing the plaintiffs' only reasonably feasible means of recovery."
The Second Circuit decision rested on an established Supreme Court precedent that says that under the Federal Arbitration Act, arbitration is only appropriate when it entails no loss of substantive rights. The Supreme Court first expressed this principle in 1985 in Mitsubishi Motors v. Solar Chrysler-Plymouth, a case in which a party was required to arbitrate a claim arising under the Sherman Antitrust Act. In Mitsubishi, the Court stated that arbitration could be ordered only if the litigant "may vindicate its statutory cause of action in the arbitral forum." The Court further explained that "[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute."
There is a lot more good analysis. You should read the whole thing.
Thursday, June 20, 2013
Today, we have a guest post from Lise Gelernter (Buffalo) on the United States Supreme Court's latest decision on arbitration in American Express v. Italian Colors Restaurant. The decision can be found on the Supreme Court website here under the name of the case.
Here's Lise's overview of the decision:
The Court, four in the majority (Justice Scalia writing the decision), one in concurrence (Justice Thomas) and three in the dissent (Justice Kagan writing the opinion with Breyer and Ginsburg joining her – Justice Sotomayor took no part, presumably because she was on the 2d Cir. when it decided the case that the Supreme Court reviewed), said that the Federal Arbitration Act prohibited a court from invalidating an arbitration agreement that barred class actions, even if the practical effect was that the plaintiffs would find it impossible to vindicate their antitrust claim.
An economic analysis had shown that the cost of an expert witness to show that American Express had used improper monopolistic power to impose fees on the plaintiffs would far exceed the economic recovery that any one individual plaintiff could hope to have. As the dissent pointed out, the pluarlity and concurrence basically responded by answering that that was just “too darn bad.”
The impact in the labor and employment context is that unrepresented employees can not only be required to waive access to a court to vindicate statutory rights, but can also be required to waive their right to class actions. Thus, minimum wage, employment discrimination and other types of employment actions will have to be pursued on an individual basis if that waiver exists in a pre-hire agreement.
On the collective bargaining side of things, it will be interesting to see if an employer tries to compel individual arbitration of a contract grievance that was brought on behalf of a whole bargaining unit (e.g., a violation of a contractual provision on overtime scheduling). I don’t know that it would make much of a difference in the long run in terms of the practical effect of an arbitration award, which probably means it is not worth it for an employer to pursue that kind of argument.
Great commentary, Lise, and looking forward to others' comments on this important new arbitration law case.
Monday, June 10, 2013
The Supreme Court issued three opinions today, and among them was Oxford Health Plans LLC v. Sutter.
Here is the syllabus from the opinion:
Respondent Sutter, a pediatrician, provided medical services to petitioner Oxford Health Plans’ insureds under a fee-for-services contract that required binding arbitration of contractual disputes. He nonetheless filed a proposed class action in New Jersey Superior Court, alleging that Oxford failed to fully and promptly pay him and other physicians with similar Oxford contracts. On Oxford’s motion, the court compelled arbitration. The parties agreed that the arbitrator should decide whether their contract authorized class arbitration, and he concluded that it did. Oxford filed a motion in federal court to vacate the arbitrator’s decision, claiming that he had “exceeded [his] powers” under §10(a)(4) of the Federal Arbitration Act (FAA), 9 U. S. C. §1 et. seq. The District Court denied the motion, and the Third Circuit affirmed.
After this Court decided Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662—holding that an arbitrator may employ class procedures only if the parties have authorized them—the arbitrator reaffirmed his conclusion that the contract approves class arbitration. Oxford renewed its motion to vacate that decision under §10(a)(4). The District Court denied the motion, and the Third Circuit affirmed.
Held: The arbitrator’s decision survives the limited judicial review allowed by §10(a)(4). Pp. 4−9.
(a) A party seeking relief under §10(a)(4) bears a heavy burden. “It is not enough . . . to show that the [arbitrator] committed an error—or even a serious error.” Stolt-Nielsen, 559 U. S., at 671. Because the parties “bargained for the arbitrator’s construction of their agreement,” an arbitral decision “even arguably construing or applying the contract” must stand, regardless of a court’s view of its (de)merits. Eastern Associated Coal Corp. v. Mine Workers, 531 U. S. 57, 62. Thus, the sole question on judicial review is whether the arbitrator interpreted the parties’ contract, not whether he construed it correctly. Here, the arbitrator twice did what the parties asked: He considered their contract and decided whether it reflected an agreement to permit class proceedings. That suffices to show that he did not exceed his powers under §10(a)(4). Pp. 4−6.
(b) Stolt-Neilsen does not support Oxford’s contrary view. There, the parties stipulated that they had not reached an agreement on class arbitration, so the arbitrators did not construe the contract, and did not identify any agreement authorizing class proceedings. This Court thus found not that they had misinterpreted the contract but that they had abandoned their interpretive role. Here, in stark contrast, the arbitrator did construe the contract, and did find an agreement to permit class arbitration. So to overturn his decision, this Court would have to find that he misapprehended the parties’ intent. But §10(a)(4) bars that course: It permits courts to vacate an arbitral decision only when the arbitrator strayed from his delegated task of interpreting a contract, not when he performed that task poorly. Oxford’s remaining arguments go to the merits of the arbitrator’s contract interpretation and are thus irrelevant under §10(a)(4). Pp. 6−9.
675 F. 3d 215, affirmed.
KAGAN, J., delivered the opinion for a unanimous Court. ALITO, J., filed a concurring opinion, in which THOMAS, J., joined.
I'll admit to being a bit surprised at the outcome here. The language of prior decisions on arbitration suggested that the Court thought arbitration and class actions were incompatible and that contractual language would have to explicitly allow class actions in arbitration before they could go forward. The contractual language in this case was not that clear. The arbitrator in this case interpreted this arbitration clause as allowing class actions (just one of the universe of civil actions) to proceed in arbitration:
No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration in New Jersey, pursuant to the rules of the American Arbitration Association with one arbitrator.
The rule on deferring to the arbitrator trumped what may be the majority of Justices' own view on class actions.
Tuesday, April 30, 2013
Joe Slater (Toledo) just posted on SSRN his article (OSJDR) Interest Arbitration as Alternative Dispute Resolution: The History from 1919 to 2011. Here's the abstract:
This paper comes from a February 2012 Symposium, "The Role of ADR Mechanisms in Public Sector Labor Disputes: What Is at Stake, Where We Can Improve & How We Can Learn from the Private Sector." It discusses the history of an important form of alternative dispute resolution: the use of what is called “interest arbitration” to resolve bargaining impasses in public-sector labor relations. This process is used in many states as an alternative to strikes. While interest arbitration has been a crucial part of public-sector labor law and labor relations for decades, it has come under increased scrutiny recently. Indeed, in the wave of laws passed in 2011 restricting the rights of public-sector unions to bargain collectively, interest arbitration was repeatedly attacked, and in several states it was eliminated or restricted.
This paper gives a historical overview of the development of interest arbitration, discussing how and why it developed as it did. This development was neither inevitable nor “natural” in that many other western democracies generally allow public workers to strike. But only a few states in the U.S. allows any public workers to strike. Thus, the question is: why did U.S. law and policy develop the way it did? This paper traces the relevant history from 1919 through to the new, restrictive laws of 2011. It starts with the Boston Police strike of 1919 — a seminal event in the history of public-sector labor law, that had a profound and lasting impact on how U.S. policymakers felt about dispute resolution in public sector labor law. It then turns to the first public-sector labor law permitting collective bargaining — passed, ironically in view of recent events, in Wisconsin in 1959 — and describes how concerns about dispute resolution were central to debates over that law. The paper continues by explaining how interest arbitration in public-sector labor relations has evolved and how it has worked from the 1960s into the 21st century. Finally, the paper explores the very recent developments in this area in the laws of 2011.
Monday, April 8, 2013
Brown on Comparative Alternative Dispute Resolution for Individual Labor Disputes in Japan, China and the United States: Lessons from Asia?
Ron Brown (Hawaii) has recently published in the St. John's Law Review (86 St. John's L. Rev. 843) his new article: Comparative Alternative Dispute Resolution for Individual Labor Disputes in Japan, China and the United States: Lessons from Asia?
Here is the abstract:
Resolving individual labor rights disputes in East Asia and the United States in recent years has taken on new significance and prominence for both domestic and multinational corporations. New legal approaches have been put into place in Japan, China, and the United States that deal with individual rights under either individual and/or collective contract or statutory labor disputes. The United States Supreme Court has approved the use of private arbitration under individual and collective contracts to resolve both contractual and statutory labor disputes. How these approaches compare may provide thought of reform for the U.S., no matter how unlikely.
This area of the law is, needless to say, developing at lightening speed. Having myself learned about how arbitration works in Japan during my travels there, I know that Ron's piece will shed much needed light on how other parts of the world rely on ADR to resolve their legal disputes.
Wednesday, April 3, 2013
St. John’s Law Review, Volume 86, Number 2 - Spring 2012
Symposium: Worlds of Work: Employment Dispute Resolution Systems Across the Globe
- Paul F. Kirgis & David Gregory, Introduction
- Keynote Address: Theodore J. St. Antoine, The Moral Dimension of Employment Dispute Resolution, p. 391.
- Samuel Estreicher, Strategy for Labor Revisited, p. 413.
- William B. Gould IV, A Century and Half Century of Advance and Retreat: The Ebbs and Flows of Workplace Democracy, p.431.
- Julius Getman & Dan Getman, Winning the FLSA Battle: How Corporations Use Arbitration Clauses to Avoid Judges, Juries, Plaintiffs, and Laws, p. 447.
- George H. Cohen, Advancing Student Achievement in the United States Public Schools Through Labor-Management Collaboration: The FMCS’s Evolving Role in Education Reform, p.465.
- David L. Gregory & Michael Harary, A Comparative Assessment of Labor and Employment Dispute Resolution in the United States and United Kingdom from 2006 Through 2011, p. 485.
- Guido Carducci, The Importance of Legal Context and Other Considerations in Assessing the Suitability of Negotiations, Mediation, Arbitration and Litigation in Resolving Effectively Domestic and International Disputes (Employment Disputes and Beyond), p. 511.
- Ronald C. Brown, Comparative Alternative Dispute Resolution for Individual Labor Disputes in Japan, China, and the United States: Lessons from Asia?, p. 543.
- Elayne E. Greenberg, Overcoming Out Global Disability in the Workforce: Mediating the Dream, p. 579.
- Mary Kalich, Do You Need A Doctor’s Note? Lay Testimony Should be Sufficient Evidence for FMLA Leave Unless Compelling Counter Conditions Exist, p. 603.
- Jennifer Kelly, He Said, She Said: Sex Prosecutions and Spousal Privileges Under the Federal Rules of Evidence, p. 637.
- Nicole Lapsatis, In the Best Interests of No One: How New York’s “Best Interests of the Child” Law Violates Parents’ Fundamental Right to the Care, Custody, and Control of Their Children, p. 673.
- Daniel Mazzella, We’re on a Mission from God: Properly Interrupting RLUIPA’s “Equal Terms” Provision, p. 715.
Tuesday, March 19, 2013
Charlie Sullivan & Tim Glynn (both Seton Hall) have just posted on SSRN their article (forthcoming 64 Alabama L. Rev. (2013)) Horton Hatches the Egg: Concerted Action Includes Concerted Dispute Resolution. Here's the abstract:
As interpreted by the Supreme Court, the Federal Arbitration Act has largely swept all before it, validating agreements to arbitrate almost all disputes, including those involving claims under statutes regulating the employment relation. That era may be nearing an end. The National Labor Relations Board recently held in In re D.R. Horton that employers may not compel employees to waive their NLRA right to pursue collective legal redress of employment claims. Instead, the NLRA mandates that some mechanism for concerted dispute resolution remain available in arbitral or judicial forums. Unsurprisingly, this decision has generated an enormous amount of litigation. Although the case itself is pending before the Fifth Circuit, courts across the country are now confronting Horton-based challenges to the enforcement of mandatory arbitration clauses in employment contracts. To date, they have generally rejected these challenges on various grounds.
This Article will explore why these courts are wrong and why agreements that bar concerted dispute resolution are indeed invalid. The Board’s articulation of labor law rights ordinarily is entitled to judicial deference. But such deference has been called into question in Horton itself in part because of a recent circuit court decision invalidating recess appointments to the Board. As we will demonstrate, however, no deference is necessary because Horton reflects the correctnot merely a reasonableinterpretation of the NLRA as well as its predecessor, the Norris-LaGuardia Act.
Moreover, although the Supreme Court has seemingly treated the Federal Arbitration Act as a “super-statute” that overwhelms all before it, the Court has simultaneously denied doing more than applying what textual analysis and interpretive conventions require. The Horton question will force the Court to confront the collision between what it says and what it does. Established doctrines of statutory interpretation, recently and resoundingly reaffirmed by the Court, dictate a contrary result. Indeed, to the extent the concerted activity mandate of federal labor law conflicts with provisions of the FAA, the former clearly supersedes the latter.
With apologies to Dr. Seuss, Horton meant what it said and said what it meant. Courts must follow, one hundred percent.
For what it's worth, I agree completely with Charlie and Tim about what the Court should do, but I do not expect that this is what the Court will do. As I have argued elsewhere, the Court is, in FAA cases, all too willing to subsume plain language to the Court's policy preference for arbitration. I suspect that the Court will do as it did in Concepcion, and find that the D.R. Horton rule would have the effect of discouraging employers from promulgating individual employment arbitration agreements and therefore is inconsistent with the FAA.
One might argue that Concepcion is distinguishable because it involved a potential conflict between the FAA and a state common-law doctrine (unconscionability) instead of a federal statute (NLRA). But I wouldn't read too much into this given the express language in the FAA Section 2 preserving state common-law defenses to arbitration agreements. If the Court in Concepcion was willing to erase that language, I see no reason why the Court will give the language of the NLRA any higher priority.
Tuesday, March 12, 2013
Many Workplace Prof Blog readers will recall Suja Thomas's presentation at January's AALS Conference / Employment Discrimination panel in which she argued that Twombly, Wal-Mart, and Ricci are oddball cases—cases with atypical facts in which the Court made broad changes to the law in a way that significantly affects cases with more typical facts. Since then, she has written an article entitled The Oddball Doctrine: How Atypical Cases Make Bad Law in which she argues that the Court should exercise restraint by not making legal changes in these types of cases. During Suja’s presentation, it occurred to me that the Oddball Doctrine could apply to many of the Court’s recent arbitration decisions.
That inspiration has resulted in my most recent article (co-authored with Mark Gerano; forthcoming 30 Hofstra JLEL (2013)) Oddball Arbitration. The abstract is below. I've also posted over on PrawfsBlawg an attempt to crowdsource other areas of the law in which the Court may be using cases with oddball facts to shape the law under the political radar. Check it out.
Congress passed the FAA in 1925 to resolve commercial disputes involving merchants. Since then, the Supreme Court has dramatically expanded the scope of the FAA and applied it in the employee and consumer settings. More recently the Supreme Court has chosen for its arbitration docket a set of cases with wholly atypical fact patterns in what appears to be a deliberate effort – successful so far – to advance its pro-arbitration policy agenda without provoking a political backlash. This article describes three oddball arbitration cases and argues that their atypical facts have permitted the Court to create legal rules that, while perhaps creating a just outcome in the oddball cases themselves, create unjust outcomes in the typical arbitration cases that much more commonly appear in the lower courts.
Friday, March 1, 2013
The Supreme Court Wednesday heard oral arguments in Italian Colors, a consumer arbitration case that has thepotential to nuke one of the few remaining defenses to employment arbitration agreements. Mark Gerano summarizes oral argument as follows:
On Wednesday, February 27 the Court heard oral arguments in the case American Express v. Italian Colors Restaurant. (No-12-133). The majority of the argument centered on whether the plaintiffs would be able to effectively vindicate their statutory rights under the Sherman Act without filing a class-action lawsuit in federal court. The plaintiffs assert that in order to bring this case, they will have to hire experts at a very high cost – something that would not be cost-effective if they were forced to arbitrate claims individually. Justice Kagan and Justice Ginsburg seemed concerned with the fact that foreclosing such a class action would effectively make the plaintiffs unable to vindicate their statutory rights under the Sherman Act because of the cost.
Justices Scalia, Kennedy and the Chief Justice did not display the same sympathy for the plaintiffs in this case. Justice Scalia pointed out that the Sherman Act was created nearly forty years prior to FRCP Rule 23 allowing class actions. He [suggested that the Sherman Act's enforced without class actions.] Like Justice Scalia, the Chief Justice seemed skeptical that a class action was the only way for these plaintiffs to effectively vindicate their rights. He urged that even without a class action, plaintiffs could still work together to share costs of experts and other parts of the litigation, thus significantly reducing their costs. He repeatedly suggested using trade associations to compile the type of reports needed to show Sherman Act violations. The [plaintiffs] countered by arguing that the cost sharing might be prevented because often times arbitration agreements contain confidentiality provisions that would prevent this type of sharing. Nonetheless, the Justices suggested a number of other ways that the cost be kept to a minimum and did not seem persuaded that class action litigation was the only way this group of plaintiffs could effectively vindicate their rights. Because of this strong push to finding a way other than class action for the plaintiffs to vindicate their rights, I think it is a safe bet that American Express will prevail in its petition.
Given what happened at oral argument, I think the best-case scenario is that the Court rules for American Express on the ground that plaintiffs have not shown an inability to vindicate their statutory rights, but will leave (at least for now) the vindication-of-statutory-rights defense intact.
Wednesday, January 23, 2013
vol. 28 #1 (2013)
Symposium 2012: The Role of ADR Mechanisms in Public Sector Labor Disputes: What Is at Stake, Where We Can Improve, and How We Can Learn from the Private Sector
- Michael Carrell & Richard Bales, Considering Final Offer Arbitration to Resolve Public Sector Impasses in Times of Concession Bargaining, p. 1.
- Howard S. Bellman, The Importance of Impasse Resolution Procedures to Recent Revisions of Wisconsin Public Sector Labor Law, p. 37.
- Charles B. Craver, The Use of Alternative Dispute Resolution Techniques to Resolve Public Sector Bargaining Disputes, p. 45.
- Ariel C. Avgar, J. Ryan Lamare, David B. Lipsky, & Abhishek Gupta, Unions and ADR: The Relationship between Labor Unions and Workplace Dispute Resolution in U.S. Corporations, p. 63.
- Joel Cutcher-Gershenfeld & Saul A. Rubinstein, Innovation and Transformation in Public Sector Employment Relations: Future Prospects on a Contested Terrain, p. 107.
- Martin H. Malin, Two Models of Interest Arbitration, p. 145.
- Lamont E. Stallworth & Daniel J. Kaspar, Employing the Presidential Executive Order and the Law to Provide Integrated Conflict Management Systems and ADR Processes: The Proposed National Employment Dispute Resolution Act (NEDRA), p. 171.
Tuesday, January 15, 2013
The U.S. Supreme Court’s jurisprudence interpreting the Federal Arbitration Act (FAA) is incoherent insofar as it relies on the concept of the parties’ “intent.” on the matter. To illustrate this distorting influence of "intent," the Article dissects Supreme Court opinions in two broad sections of the FAA case law, both of which illustrate vividly the deforming effect of intent on it. The first concerns the carving up of jurisdiction between courts and arbitrators that goes to the foundations of the FAA, namely, the question of which decisionmaker — court or arbitrator — should determine whether the underlying dispute is arbitrable. The second is a controversy of more recent provenance that already has striking implications for all manner of consumer and employment contracts, specifically, the question concerning the availability of class arbitration. The result of this confused exercise is a tottering FAA case law built on ever more rarefied abstractions of “intent” that are little anchored in reality, but yet impact in a very real way a broad range of contracts, including countless consumer and employment agreements. Thus, a complete and accurate account of the Court’s jurisprudence under the FAA is not possible without a close scrutiny of the role of “intent,” a concept that is ultimately wanting.
This is a terrific article. Though this is far from the first article to argue that the Supreme Court’s FAA jurisprudence reasons backwards from the Court's strong policy preference for bilateral arbitration, it is the first article to rigorously analyze the Court’s shifting meaning of intent and to posit that this is the (or at least a) mechanism by which the Court does so. The article is extraordinarily timely, having been written shortly after the Court’s recent Concepcion opinion began sending up howls of disbelief, and just before the Court seems ready to do it all again in Italian Colors (see here and here).
Wednesday, December 19, 2012
Thanks to Ian Mitchell for alerting me that the Supreme Court will hear oral arguments on February 27 in American Express Co. v. Italian Colors Restaurant, No. 12-133, 2012 WL 3096737 (U.S. Nov. 9, 2012). At issue is whether "interferes with the vindication of federal statutory rights" survives as a defense to lopsided arbitration agreements.
Wednesday, December 5, 2012
I am re-posting here, with permission, a post by Paul Kirgis (St. John's) over at ADR Prof Blog on the Supreme Court's most recent arbitration case. The original post is Nitro-Lift Technologies v. Howard: The Arbitration Locomotive Rolls On.
As Jill Gross suggested in her post the other day, there is nothing novel about the Supreme Court’s per curiam decision in Nitro-Lift Technologies v. Howard, 568 U.S. ___ (2012). And the fact that the case seems unexceptional is powerful evidence for how extreme the Supreme Court’s arbitration jurisprudence has become.
Like most states, Oklahoma has long disfavored covenants not to compete. Oklahoma goes further than many in that it has enacted a statute, passed in 2001, rendering void and unenforceable any contract that prevents an employee from engaging “in the same business as that conducted by the former employer or in a similar business as that conducted by the former employer as long as the former employee does not directly solicit the sale of goods, services or a combination of goods and services from the established customers of the former employer.” Okla. Stat. Tit. 15 § 219A. Without question, Oklahoma considers the regulation of contracts in restraint of trade to be an important public policy matter.
In Nitro-Lift, the Oklahoma Supreme Court refused to enforce an arbitration agreement in a dispute involving a covenant not to compete. Unfortunately, the court’s sloppy reasoning left it open to a summary reversal by the Supremes. The Oklahoma court, citing only its own precedents, held that “the existence of an arbitration agreement in an employment contract does not prohibit judicial review of the underlying agreement.” That holding is obviously in conflict with Federal Arbitration Act precedent, so its reversal is unsurprising.
But the result of the decision is remarkable. Private employers in Oklahoma are flatly prohibited from including broad covenants not to compete in their contracts with employees. Enforcing that proscription—and thus protecting both the free market and the rights of employees—would appear to be a basic obligation of the Oklahoma courts. Yet the courts of Oklahoma have just been told that private employers can, simply by dropping a paragraph of text into an employment contract, divest them of jurisdiction to enforce Oklahoma’s law against covenants not to compete.
Decisions like Nitro-Lift are extraordinary in their disregard for principles of federalism. The Supreme Court’s arbitration jurisprudence uses a short procedural statute enacted almost 90 years ago to deprive states of their historical prerogative to regulate and enforce private contracts. As Richard Reuben has persuasively argued, this is not a conservative position. It’s an example of judicial activism in the service a radical Chamber of Commerce agenda.
Wednesday, November 14, 2012
Last week, while I was on the road, the Supreme Court granted the petition for a writ of certiorari in American Express Co. v. Italian Colors Restaurant, No. 12-133, 2012 WL 3096737 (U.S. Nov. 9, 2012). At issue is "[w]hether the Federal Arbitration Act permits courts, invoking the ‘federal substantive law of arbitrability,’ to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal law claim.” See generally Jill Gross's post over at ADR Prof Blog.
Recall that in AT&T Mobility v. Concepcion, the Supreme Court enforced an arbitration agreement containing a class-action waiver over a finding that under state law the waiver was unconscionable. In Italian Colors, the Second Circuit has held that a similar waiver is unenforceable because it interferes with the vindication of federal statutory (antitrust) rights.
The Federal Arbitration Act requires enforcement of arbitrtion agreements "save for" generally applicable defenses available under state contract law. The Supreme Court in Concepcion effectively read the "save for" language out of the statute. The one defense left to lopsided arbitration agreements is that they interfere with the vindication of federal statutory rights such as the right to be free from workplace discrimination created by Title VII. In other words, when a lopsided arbitration agreement forces a court to choose between enforcing the FAA on the one hand and vindicating Title VII rights on the other, courts should choose the latter.
I expect the Supreme Court will choose the former, and will advance three grounds for doing so. First, the Court will argue that the either/or proposition of FAA v. statutes such as Title VII is chimerical -- consumers and employees can still pursue their claims individually even if they are barred from pursuing the claims as class actions. The Court will ignore, as it did in Concepcion, the contrary argument that aggregating claims is practically -- albeit not legally -- the only way to bring high-volume low-dollar claims.
Second, the Court will argue that the "plain language" of the FAA should trump the "policies" behind federal statutes such as Title VII. Of course, the really plain language of the FAA creates a state-contract-law defense that the Supreme Court white-outed in Concepcion in favor of the pro-arbitration policy of that statute.
Third, the Court will argue that the "presumption of arbitrability" articulated in Mitsubishi v. Soler Chrysler-Plymouth (1985) means that if the FAA is inconsistent with other federal statutes, the FAA should trump later-enacted statutes because Congress, in enacting those statutes, could have but chose not to write into those statutes provisions saying that those statutes trump the FAA. Never mind that the Congresses that passed both the FAA and the later statutes never dreamed that an activist Supreme Court would apply the FAA to employment and consumer disputes, way beyond the commercial disputes for which the statute was designed.
One final note. When the Supreme Court accepted cert in Concepcion, it did so in an extraordinarily atypical arbitration case in which the defendant had gone way out of its way to ensure that individual rights could be pursued notwithstanding the class-action waiver. This allowed the Court to hand down a pro-arbitration ruling while ignoring the anti-consumer/employee effect the ruling would have on the vast majority of cases to which the FAA now is being applied. In Italian Colors, the Court has done it again. Plantiffs are merchants who have sued American Express over the terms AmEx imposes on merchants who accept AmEx credit cards from consumers. Thus, the Court will have the opportunity to issue yet another pro-arbitration ruling in a context that hides the the anti-consumer/employee effect the ruling will have on the vast majority of cases now subject to the FAA. Maybe the likely outcome of Italian Colors is justified in the context of the commercial cases for which the FAA originally was designed. But it certainly is not justified in the context of the commercial/employment cases to which the Court now is requiring that it be applied.
Monday, November 12, 2012
Henry Drummonds (Lewis and Clark College - Law School) has posted on SSRN his forthcoming piece in the Willamette Law Review: The Public Policy Exception to Labor Arbitration Award Enforcement: A Path Through the Bramble Bush.
Here is the abstract:
Prompted by a dispute over a labor arbitrator’s controversial reinstatement award in favor of an Oregon police officer who fatally shot a suicidal black man in the back after the man’s family had called the police for help, this article argues for a revitalized public policy exception to arbitral award enforcement. In this view, the public policy exception sometimes suffers from too cribbed an interpretation by both management and union lawyers, arbitrators, and reviewing courts and labor boards. At the same time a revitalized public policy exception must be applied judiciously so as not to undermine the bedrock labor relations policy embodied in the Steelworkers Trilogy favoring final and binding arbitration of workplace disputes in the unionized sector.
Drawing on lessons from a close reading of the three leading public policy decisions of the United States Supreme Court — herein dubbed the “Public Policy Trilogy” — the article shows how reviewing bodies SHOULD review de novo the question whether reinstatement REMEDIES, and not the underlying employee conduct, comply with clearly defined public policies. The Steelworkers Trilogy can be accommodated by confining the public policy review to the question of reinstatement — as distinct from the question whether the arbitral finding of a contract violation draws its “essence” from the collective bargaining agreement — and further, by basing the public policy review on facts found by the arbitrator in accordance with the parties’ agreement to submit their dispute to “final and binding” arbitration. These principles derive from a close reading of the Supreme Court’s holdings and discussion in the Public Policy Trilogy. The article shows how public sector cases in the private sector, and in the public sector in Oregon, Illinois, and Pennsylvania, while largely consistent with this more nuanced view of the Trilogy, have occasionally strayed from these teachings and too narrowly applied the public policy exception.
Very interesting insights into a very important area of labor arbitration law. Check it out!